The Palestinian economy is vibrant and growing, and comprised of various untapped investment opportunities with high return on investment. The Palestinian economy showed a proven indicators of development such as: continuous economic growth, and growth of the Palestinian exports to the international markets that function with high quality standards, the increase of export to the new markets of countries that has signed trade agreements with Palestine, the increase of the number of international companies that has attracted to invest in Palestine directly or engaged through joint ventures or different types of partnership with local Palestinian investors, the growth in the Palestinian market’s, financial performance where a different companies were able to distribute annual profits for shareholders, and the growth of the annual revenues. These are live indicators proves that the Palestinian market is not limited and has the capacity to incubate more investment and grow to access international markets.

Overview:

Population: the estimated people of the Palestinian all over the world around 13 million distributed within the borders of the historical Palestine, and both Arabic and Islamic world, along with Americas and Europe and Far East countries and Africa; the Palestinian population within the sixteen governorates Northern governorates (West Bank) and Southern Governorate (Gaza Strip) around 4.8 million distributed in cities and villages and refugee camps and main cities East Jerusalem (The capital), Bethlehem, Hebron, Ramallah and Albireh, Nablus, Jenin, Tulkarem, Qalquilieh, Tubas, Jericho, Gaza, Deir Albalah, Khan Younis and Rafah; the Arab Palestinian within historical Palestine around 1.5 million.

Area: Historical Palestine area is around 27,500 Km2 and the northern and southern governorates represent around 22% of total area around 6,450Km2.

Used languages: Arabic (Official language), English is widely spoken and used especially for business, and there is a wide use of French, Spanish, Hebrew, German and Italian.

Currency: Historical and until year 1948 Palestine used the Palestinian Pound as national currency, since then the currency is not used , and currently there is more than one accepted and used currencies like United States Dollars, Jordanian Dinar, Euro, Egyptian Pound and the new Israeli Shekels is widely used.

Electronic domain and codes: Palestine internet domain is (.PS) and the international code (+970) and the international code is accepted all over the world except some countries do not recognize it and accept the number (2) instead of (0) in the international code; and the codes for the Palestinian cities are as follow: East Jerusalem (the capital), Bethlehem, Hebron, Ramallah and Albireh, Jericho (02); Jenin (04); Nablus. Tulkaren, Qalquilieh, Tubas (090; Gaza, Deir Albalah, Khan Yunis and Rafah (08).

Official working hours: Working days for public institutions are Sunday to Thursday except Ministry of Tourism and Antiquities that have off days Friday and Sunday, while the working hours are from 8:00 am till 15:00 pm; in other hand non-government and private sectors works until 17:30 and depends on the nature of the organization as some of them uses Friday or Sunday as weekly off day.

Labor, minimum wages and unemployment: availability of a modern labor law, and this law guarantee for labors to have a health insurance, and one day off on weekly basis, while the normal working hour is 45 hours weekly, and depends on the service length the labors can benefit of yearly vacation as 14 paid days if they are less than 5 years in service and more than that they are eligible for 21 paid days as vacation; and the minimum wages is around 420 USD and the average salary is 550 USD, and the unemployment rate is around 26.2% (Northern governorate 18.2%; Southern governorate 41.7%).

External assets – foreign liabilities for Palestine at the end of fourth quarter 2017 revealed that the net HP amounted to about USD1, 373 million, which means that the Palestinian economy’s investment outside Palestine outweighs investment in Palestine from abroad. The resident cash deposit in foreign banks and foreign exchange in the Palestinian economy accounted for the bulk of the external assets, constituting 65.2% of the total value of the external assets.

Total assets: The total stocks of External Assets for Palestinian economy amounted to USD 6.455 million, the Foreign Direct Investment Abroad contributed to 6.5%. Portfolio Investments abroad reached 16.3%, While other Foreign Investment Abroad (mainly currency and deposits) reached 70.3% and Reserve Assets amounted to 6.9%, at sectoral level, the external investments of banks sector represented a large share of the external assets, standing at 73.6% of the total value of external assets for Palestinian economy.

Total liabilities: The total stocks of Foreign Liabilities in Palestine (Stocks of non-residents invested in Palestine) amounted to USD 5,082 million, the Foreign Direct Investment in Palestine contributed to 53.2%. Portfolio investment in Palestine reached 13.1% and Other Investments in Palestine (mainly loans and deposits from abroad) amounted to 33.7% at sectoral level, the foreign investment in banks sector contributed a major value in the foreign liabilities, represented by 36.4% the total value of foreign liabilities on Palestinian economy.

External bebt: The Gross External Debt on the Palestinian economic sectors reached USD 1,720 million, the debt on the government sector represented 60.5%, while debt on banks sector reached 35.1%, and debt on other sectors (nonbank financial corporations, non-financial corporations, NGOs and household sector) amounted to 4.1% and the lending between affiliated companies reached 0.3%

Exports and Imports: Total export around one USD billion mainly of (Stone and Marble, Plastic industry, metal and Wood furniture, Handcraft’s, Food and Beverage, Textile and Garments, Leather and Shoes, Pharmaceuticals, Medical and Aromatic Herbs, Olive oil, Vegetables. Services industries as Travel and Tourism, Software programming and information technology and related outsourcing); and total Imports reaches around five USD billions mainly in Energy and its subsectors (Electricity, Fuel, Natural Gas) Medicine, Heavy industries and Electronic appliance, Steel and Cement, Food and Beverages, Textile and Garments, and various produces.

Banking and financial institutions: the financial sector in Palestine prove its efficiency and currently Palestine has 15 licensed comprised of 8 foreign banks and 7 local banks all operates through 342 branches, in other hand there is a 6 specialized financial and lending institutions licensed and operates through a 91 branches, more over there is more than 250 licensed financial and exchange shops.

Taxes: The eligible individual is anyone generated income and who’s resident period not less than (120) days during a calendar year either continuous or intermittent; while the eligible corporate that generated income and had resident period of (183) days during the calendar year wither continuous or intermittent; hence the tax regime as follow:

Individual income tax: from (1) to less than (21.43) USD thousand percentage of (5%); from (21.43) to (42.86) USD thousands percentage of (10%) and any amount more than that subject to percentage of (15%).

Tax deductions for individuals: First (3,430) USD for resident Tax payer, the actual paid amount for transportation or (10%) of total yearly salary, total (1,700) USD yearly for University study except who received a scholarship or grant, total (8,600) USD for one time to build or buy a home or deduct the actual interests paid for home loan with limit of 1,140 USD yearly for no more than 10 years.

Tax exemptions for individuals: gains from the sale of property and capital gains from the sale of investments in securities.

Corporate income tax:

Tax on goods and services:

Value added tax: (16%) VAT is a consumption-based tax imposed on all local goods and services except the export and Tourism services and fruits and vegetables that have a rate of 0%.

Purchase tax: implemented on retails and subject to various percentage depends on the produce and paid by end-users.

Other levies

Capital Gains Tax: Business and companies are not assessed for capital gains tax.

Tax for Service Contracts: Income generated or earned from contracts entered into for the provision of services is taxable.

Dividens, Leases and Royalties: Dividens paid out of profit are taxable. Dividens paid after redistribution of capital are exempt. Royalties are not exempt. Lease payments are not exempt. Retained profits are exempt only if reinvested.

Gift and Inheritance Tax: There are no taxes paid on gifts or inheritance.

Companies: Company registration is an easy process in Palestine as long as all required registration documents are available, and it is accessible via the portal of Ministry of National Economy or PIPA, and always it is advised to have a professional legal consultation on the process of registration to select the best legal registration that suites the business current and future demands of expansion, in general the total registration fees around 150-700 USD depends on the legal form of company, and companies can be registered as Public or private shareholding company, foreign company (ordinary general, ordinary limited, private or public shareholding), non-profit company, civil company, holding company.

Doing business index4: Palestine has surpassed 26 economies to rank 114 out of 190 economies according to the World Bank’s Business Doing Business Report 2018. Palestine’s 2017 ranking was 140. This progress comes as a result of several reforms in the measures that have been achieved, and it’s expected to enhance the rank since new arrangement and measures in place.

Investor visit permit: Given that Palestine have no complete control on borders therefore the Investor visit to Palestine subject to obtain Investor visit permit as per mentioned below requirements, and the other option for Investor visit is to issue a direct visa and this applicable to countries have diplomatic relations with the counterpart.

Requirements to get investor visit permit: a direct note to PIPA highlighting the request to issue a permit or complete the e-form in PIPA’s portal at through the e-services, and the required documents should be attached or uploaded (Documents like company registration in the working country, any registry of proof of business, general over view on the current investment and potential investment in Palestine, Passport copy valid minimum for 6 months, contact details cellular and e-mail) and all the process needs minimum 45 days, and once all requirements are complete PIPA will apply through the Palestinian Civil Affairs Authority for permit, and this Permit could be renewed for a multi entry base depends on starting business registration and may apply for permanent residence once the eligible investment up and running; investors who obtained a visa may apply to renew their visa through the ministry of interior; the Investor visit permit holder are eligible only to use the land borders like Alkaraman Bridge (King Hussain Bridge) that connects Palestine with Jordan, and Rafah crossing boards that connects Palestine with Egypt; noting that crossing between Northern governorate and Southern governorate required as a special permit.

International agreements (Economic, Trade and Investment): Several international and bilateral economic and trade agreements have been concluded : the Greater Arab Free Trade Area “GAFTA”, an Interim agreement on trade and cooperation with the EU, the Agadir Agreement (in principle), an Interim agreement with countries European Free Trade Association “EFTA”, Free Trade Agreement with MERCOSUR Countries, Economic Agreement with the Hashemite Kingdom of Jordan, Arab Republic of Egypt, Trade Agreement with Saudi Arabia, Agreement on Trade Cooperation with the State of the Russian Federation, Arrangements on Free Trade with the state of Canada and the United States of America, a trade agreement with the Republic of Turkey, and on the other hand Palestine signed investment protection agreements with several countries such as the Federal State of Russia, Federal Republic of Germany, Republic of Turkey, Republic of Vietnam, Bolivarian Republic of Venezuela, Kingdom of Jordan, Membership of the Arab Investment Agreement.

Investment incentives in Palestine:

PIPA: is the practical expression of the vision of the Palestinian state and its policy in encouraging the private sector and creating the right environment of investment. Pusuant to the mission of PIPA, “We build a better future for all Palestinians by providing constantly improved customer service to foreign and domestic investors, by utilizing an effective One-Stop Shop, special Invesment Incentives and State of the Art technology to attract investment. We facilitate cooperation between the private sector and government, thereby creating and maintaining a more competitive investment environment”.

PIPA plays the role of main gateway for any potential investor local, Expa, Diaspora, from Arab countries or Foreign, thereby PIPA provides the smooth procedures and avoid any potential routines and grants Investment guaranties and incentives that increase to competitive advantage for investment in Palestine and guarantee generating a distinguish profits.

PIPA is a member of the World Association of Investment Promotion Agencies (WAIPA). And have a number of features accompanied with an effective system. These features are:

1. True partnership with the private sector where it forms 40% of PIPA’s Bod.

2. PIPA’s BoD has the ability to communicate with decision maker at all levels along with good connections with political leadership and the cabinet.

3.And independent IPA, has its own legal authority in terms of obligations or legal rights.

For better services and to support investment decision PIPA launched the One-Stop Shop department to provide all kind of information and to assist investors to complete their registration procedures, and one Business up and running the introduced aftercare program will continue to support the business technically, all services are complying with the National Policy Agenda 2017-2022 adapted by the government, and in compliances with Sustainable Development Goals 2030.

Recently PIPA launched Commercial trade representatives services targeting 10 countries to in cooperation between Ministry of National economy and Ministry of Foreign Affairs, and those CTRs will be located in Palestinian Embassies and Missions with mandate to increase Palestinian exports and enhance trade relations and attract investors to invest in Palestine and attract expats.

Encouragement of investment in Palestine law no (1) for year 1998 and its amendments: the available law is modern and flexiable to grant tax and non-tax incentives for investment, and in general the law focus on supporting production sectors and job creation projects, export oriented projects or profects uses local contents in its producttion, and the law provide special treatment to Industrial, Tourism and Agricultural projects and promising projects that implement best practices to maintain environment measures and uses the alternative renewable resources.

Commitments to Investors:

Free investment in all sectors and any percentage ownership of investment.

Profitable return on Investment.

Free transfer of financial resources, i.e capital and revenue.

No expropriation, nationalization or quarantine of funds.

Equal treatment for all investors.

Availability of modern economic and legal framework to support investments.

Official and organizational commitment to maintain the Investment environment.

Industry and export and re-export within a local value added percentage (Stone and Marble and related industries, Food and Beverage, Pharmaceuticals and cosmetics, light industries, engineering industries, handcrafts)

PIPA portal offer online interactive map www.pipa.ps that contains many of the necessary information to start your business as well as to provide available investment opportunities, either new or existing investments seeking investors in different sectors, the links offer a various legal and economic information’s we invite you to not to hesitate to visit:

Contact information:

Palestinian Investment Promotion Agence “PIPA”

P.O. Box 1984, Ramallah, Palestine

Telephone : +970 22988791/2

Fax mille : +970 22988793

e-mail :
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